Aaryamann Shrivastava
FXStreet
- US inflation is expected to see an increase on a yearly basis from 3.2% in July to 3.6% in August.
- Core Consumer Price Index (CPI) is forecasted to come in at 4.3% against 4.7% in July, year-on-year.
- Bitcoin price has risen to $26,000 – only a very volatile financial market response to the data is likely to have a ripple effect.
The crypto market is on the rise ahead of the release of the US Consumer Price Index (CPI) for August. The impact on Bitcoin price and other crypto assets will largely depend on overall financial market volatility, following the release. In effect, this means if there is a big miss, either higher or lower, especially with regards to core CPI (not including energy and food).
Read more - US CPI Preview: Forecasts from 10 major banks, strong headline with rising energy prices
US CPI to make an unfavorable turn
The United States CPI will be released on Wednesday, September 13. Inflation in the US could see a second consecutive rise, as the headline CPI for the month of August is forecasted to rise to 3.6% from 3.2% in July, on a yearly basis.
The core CPI, on the other hand, could likely take a downturn with the possibility of a drop to 4.3% from 4.7% in July, year on year. The reason behind the divergence between headline and core is the sharp rise in Oil prices – which are not included in core – at the same time as other price pressures are easing in the US.
Citibank economist commented on the upcoming inflation data, stating,
“We expect a stronger increase in core inflation in August after two consecutive 0.16% MoM increases, with core CPI rising 0.3% MoM. However, at 0.252% MoM unrounded, core CPI would be close to printing another 0.2% increase, albeit still a stronger gain compared to June and July. We also expect some further slowing in shelter prices with 0.44% primary rents and 0.46% owners’ equivalent rent. Meanwhile, headline CPI should rise a strong 0.6%, the strongest increase since June 2022. This will be due to both a rise in retail gas prices and further strength in other energy components like utility gas.
The CPI will impact the Federal Reserve’s (Fed) decision-making ahead of its Federal Open Market Committee (FOMC) meeting next week. If core CPI comes out stronger than expected, the Fed may feel the need to further raise interest rates. As things stand, this would be a big surprise since core CPI is forecast to fall. According to FXStreet analyst Matias Salord,
“If the inflation data turns out in line or close to projections, it should not generate changes in Fed expectations. The US economy is performing better than others, but not due to a growth boom that requires higher rates. Similarly, a low number will not lead to a more dovish Fed. A larger rebound than forecasted would leave room for a more hawkish message, and possibly expectations of higher rates for a longer period, but not necessarily more hikes.
Bitcoin price decline on the cards
Bitcoin price, trading around $26,000, is only likely to be affected by the release of CPI data if core CPI surprises to the upside rather than slowing as predicted, or there is a very large rise in headline CPI. Should the US Bureau of Labor Statistics (BLS) meet the expectations of the market, however, BTC is unlikely to be impacted.
A surprise jump in core inflation would probably erase the recovery made in the past 24 hours as Bitcoin price climbed above $26,000. Most altcoins’ values rose, too, bringing the market capitalization above $1 trillion. This might get reversed, however, should core CPI note a rise.
A bearish turn of events could push BTC to test the support level at $24,578, falling through, which could bring it to a six-month low of $21,000.
BTC/USD 1-day chart
If core CPI surprises to the downside, however, and undercuts expectations, the reverse might happen. Bitcoin price could continue its uptick and flip the resistance at $26,430 into support, pulling itself up to $27,418. Breaching this resistance would also turn the 50 and 200-day Exponential Moving Average (EMA) lines into a support floor.
Read more - Bitcoin price climbing above $26,000 brings profit to BTC-related stocks
Like this article? Help us with some feedback by answering this survey:
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Turn off Solana and win $400,000 - Solana Foundation executive announces offer
Solana has been touted as an Ethereum killer, but as with every blockchain in the crypto market, the network does not come without its fair share of issues. While many who get hacked or exploited deal with the issues after the fact, Solana intends to get a step ahead by making a very lucrative offer to white hat hackers.
Grayscale vs. SEC deadline: Commission faces a midnight Friday deadline to challenge August 29 loss
Grayscale Investments secured a resounding victory in its longstanding case against the US Securities and Exchange Commission in late August. The lawsuit started in October after the firm approached the D.C. Circuit Court pushing to have its Bitcoin Trust converted to an Exchange-traded fund.
Loom Network price hits strong weekly resistance after 32% surge as LOOM ranks high on Korea’s Upbit
Loom Network token is highly bullish, passing as a rather lucrative investment for scalping traders, buying and selling the asset within a short period to make small profits.
Voyager founder charged by CFTC for fraud and by FTC for misleading investors that lost $1 billion
Voyager was among the first crypto companies to collapse and file for bankruptcy in 2022. While the platform has been making efforts to return its customers' assets since then, it looks like the regulatory bodies are not willing to be patient.
Bitcoin: Can BTC bears challenge crypto’s 2023 bull rally?
Bitcoin (BTC) price is at a critical juncture in the weekly time frame, where bulls and bears are battling for control. However, a multi-time-frame analysis shows that BTC is bullish daily and is likely to rally higher.